In a manufacturing environment products are built that often comprise many possible configurations while sharing some common lower level assemblies and parts in their bills of material. Due to factors such as market fluctuations and other unanticipated environmental changes, it is not uncommon for a manufacturer to be left with excess inventory on certain parts. These parts may include those that are ordered but not yet received in which the manufacturer incurs liability for cancellation, or they may be parts held by a contract manufacturer, or involve other similar types of situations.
Surplus/excess inventory can be problematic for a manufacturer as it can increase costs and reduce profits. Inventory specialists are continually working to reduce inventory levels by finding ways to shorten the pipeline and reduce lead times. Attempts at solving the surplus/excess inventory problem include developing a build plan for end products that would consume as many of these surplus/excess parts as possible. This build decision has been solved in the past in a manual fashion by investigating individual choices one at a time. Not only is this labor intensive, but when an excess parts could be used on several alternative saleable items, each of which might consume various quantities of other excess parts, the problem becomes too complex for the manual approach.
What is needed is a method of assessing existing surplus/excess parts inventories and developing an optimum build plan for end products that would consume these parts.